AI’s Aluminum Appetite Is Exploding
Artificial intelligence has unleashed one of the biggest aluminum demand shocks in decades.
Inside every hyperscale data center are:
- Cooling units
- Server racks
- Heat exchangers
- Power distribution hardware
All of them rely heavily on aluminum.
With global AI buildouts accelerating, aluminum prices have surged to multi-year highs.
The same metals supercycle extends beyond AI:
- EV makers are replacing steel with lightweight aluminum.
- Solar and wind infrastructure relies on aluminum frames and conductors.
- Power-grid upgrades — driven by AI’s massive electricity draw — require aluminum transmission lines.
The trend is clear: AI is turning aluminum from an industrial commodity into a strategic resource.
But the U.S. Aluminum Industry Is Being Crushed
Despite booming demand, American aluminum production is collapsing — and the culprit is the same force driving demand upward:
Electricity.
Aluminum smelting is one of the most energy-intensive industrial processes on Earth.
Key stat:
Producing one metric ton of aluminum consumes 14 MWh of power — enough to power a U.S. home for nearly 18 months.
New smelters require as much electricity as a city the size of Boston or Nashville.
But Big Tech’s data centers are now dominating the U.S. power market:
- Data centers are willing to pay $100+ per MWh
- Smelters need $30–$40 per MWh to break even
- U.S. electricity demand is set to grow 5–10x faster over the next decade
The result?
Smelters are shutting down while data center capacity skyrockets.
Companies like Alcoa and Century Aluminum openly admit they can’t compete on power pricing.
Some smelters are even considering selling their energy infrastructure to Big Tech instead of producing aluminum.
Foreign Competitors Are Surging
While U.S. capacity shrinks, overseas producers are ramping aggressively:
- China controls 50–60% of global aluminum supply.
- Indonesia is expanding processing capacity to become a metals powerhouse.
- The U.S. hasn’t built a new primary aluminum smelter in 45 years.
- America now produces just 670,000 tons annually — less than 1% of global output.
- Even at full capacity, U.S. smelters could only meet one-third of domestic demand.
Two-thirds of America’s aluminum is imported — mostly from Canada.
This dependence is increasingly seen as a national security risk, especially as AI infrastructure, defense systems, and EV supply chains all rely heavily on aluminum.
Industrial Policy Enters the Chat
Washington is now evaluating ways to revive domestic aluminum supply:
- A 50% tariff on imports was implemented earlier this year.
- The administration is reviewing options to rebuild domestic smelting capacity.
- The Aluminum Association estimates the U.S. would need $25 billion, five new smelters, and five years just to meet today’s demand.
New projects are emerging — like a 600,000-ton smelter in Oklahoma backed by Emirates Global Aluminum — but the biggest obstacle remains unchanged:
Power.
Without long-term access to cheap electricity, U.S. aluminum will remain uncompetitive.
WSA Take
The AI boom is reshaping global commodity markets.
Aluminum, once a background industrial metal, is becoming a pressure point for tech companies, utilities, and national security planners.
With demand soaring and U.S. supply structurally constrained, the imbalance is setting up a multi-year tightening cycle. Domestic producers with secure long-term power contracts may be positioned for significant upside — but without coordinated energy policy, America will remain dependent on foreign suppliers for one of the foundational metals of the AI age.
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